Facebook met or beat analyst projections during its fourth quarter 2019 earnings call on Wednesday. But its stock still tumbled close to 7 percent in after-hours trading.
Earnings per share of $2.56 came in over the $2.53 expected, as did revenue of $21.08 billion, sliding in above the $20.89 billion projected by Refinitiv. Daily active users numbered 1.66 billion — Factset anticipated 1.65 billion — while monthly active users hit the target of 2.5 billion.
Chief executive officer Mark Zuckerberg called it “a good quarter and a strong end to the year,” in a prepared statement.
Across its entire family of apps, including Instagram, Messenger and WhatsApp, the company boasts more than 2.89 billion monthly users — an upward tick beyond 2.8 billion in the previous third quarter.
Compared to the year-ago quarter, Facebook’s numbers also show revenue growth of almost 24.7 percent. And net income for the holiday quarter was $7.35 billion, a 7 percent increase compared to the same time the previous year.
But Wall Street zeroed in on slowing growth and outsized bills.
Although the social giant’s revenue did show some growth, it clocked in below 30 percent for four consecutive quarters. Meanwhile, Facebook revealed swelling costs and a narrowing operating margin for the year, which shrank to 34 percent from 45 percent the year prior.
Facebook’s 2019 expenses totaled $46.71 billion, a staggering 51 percent jump over 2018.
There are other matters beyond the wallet that concern investors.
Facebook has been dogged by challenges over the past year — including its much-criticized Libra digital currency announcement, $5 billion penalty stemming from a Federal Trade Commission investigation into the Cambridge Analytica scandal and multiple antitrust probes.
Still, Facebook seems confident in its value. It’s expanding its share-repurchase program by $10 billion, the company revealed, which goes beyond the $24 billion buy back it previously approved.
Part of that confidence may come from the fact that, even with all of the bad press, the company managed to add users in the U.S. and Europe, despite stringent data privacy regulations such as the California Consumer Privacy Act and the General Data Protection Regulation.
Facebook revealed 190 million daily users in the U.S. and Canada, for a gain of 1 million users between the third and fourth quarters. In Europe, the company added 6 million daily active users to reach 294 million.
The tech giant also weighed in on augmented reality and the state of its Oculus virtual reality operation, explaining that it’s “focusing on delivering the next computing platform” with AR and VR.
“While full augmented reality is still a number of years away, we hit a real milestone with virtual reality with [Oculus] Quest,” Zuckerberg said on the call, regarding the popularity of its latest VR headset. “Sales are stronger than we expected, and people are buying and engaging with more content than we expected to. On Christmas Day, people bought almost $5 million worth of content in the Oculus store.…”
Primary priorities at Facebook are advertising and commerce through experiences like Instagram shopping and checkout, messaging features for businesses and work on future offerings, like a Libra wallet or WhatsApp payments.
“Beyond WhatsApp payments, we’re working on several other efforts to help facilitate more commerce from Facebook Marketplace to Instagram Shopping to our work on Facebook Pay or our work on Libra,” Zuckerberg said.
“This is such a big space, and it’s important for empowering people. So we’re taking a number of different approaches here — ranging from people buying and selling to each other directly, to businesses setting up storefronts, to people engaging with businesses, directly through messaging, and a number of things on payments ranging from using existing national systems like India’s UPI to creating new global systems.”
Chief operating officer Sheryl Sandberg spoke about the need for “deeply integrated” processes on Instagram for things like real-time inventory levels, and explained that the company is “very focused on commerce ads on Facebook.”
“We had a very strong season,” she said, “ and we continued to see growth across Facebook and across Instagram.”